Forex analysis

Hello dear friends! First things first. Let me congratulate you on Joyful Easter and wish everyone happiness, peace, and God’s grace! I do hope that global geopolitical tensions will eventually fade and people will shrug off fears, anticipating tomorrow with confidence. I wish influential people stopped asserting their military power and did not expose life of civilians to dangers. May fluctuations of trading instruments depend entirely on fundamental data which can be predicted by means of technical analysis regardless of a stance of policymakers who throw markets into turmoil.  

It’s been three months already since David Cameron resigned as the UK Prime Minister. His resignation was triggered by Britain’s vote to leave the European Union and the following 20% slump in the national currency. The funny thing is that Cameron himself was the catalyst forBrexit, using it to threaten the EU and make verbal interventions. And, as far as I can see, new Premier Theresa May decided not to reinvent a wheel and instead adopted Cameron’s ways of manipulating the GBP/USD dynamic.

The pound volatility remains high. In the Asian session alone, when trading tends to be relatively muted, price action of the GBP/USD pair currently covers 100-200 pips. Just recently (before Brexit), the Cable’s trading range spanned around 20-30 pips. Tonight was no exception as the British pound strengthened by 1% (145 pips) against the US dollar amid low liquidity. Resistance at 1.3480 capped further gains, and now the pair is edging lower. 

Euro bulls pulled off a strategic victory during yesterday’s New York session. Unfortunately, my shorts were stopped out at 1.3580. Considering the volume around the 1.3535-1.3550 sell zone, we can definitely forget about selling for now. 

You can clearly see on the chart loads of positions accumulating from 1.3480. Yesterday the price skyrocketed from that level. During Draghi’s speech, I viewed the rally as a race for stops promising a potential downtrend resumption. However, the volume around the sell level suggests a high probability of a near-term end of the downtrend. What we should do now is to wave goodbye to the slice of profit taken away by the market and go with the flow once again.